Regional tensions flare over fate of Canada pipeline project

Reuters News
Posted: May 30, 2017 9:44 AM

By Alastair Sharp and Ethan Lou

TORONTO/CALGARY, Alberta (Reuters) - Canada's energy-rich province of Alberta on Tuesday warned its neighbor not to block a Kinder Morgan Inc pipeline project, ratcheting up political tension that helped undermine the stock market debut of the firm's Canadian unit.

Kinder Morgan plans to more than double the capacity of its Trans Mountain pipeline from Alberta to the Pacific province of British Columbia, where two political parties which oppose the project on Monday struck a deal to take power for four years.

British Columbia Greens and New Democrats - seeking to unseat Liberal Premier Christy Clark - will unveil details of their plans for Trans Mountain at 2 p.m. Pacific (2100 GMT) on Tuesday.

Clark said she would call a confidence vote in the provincial legislature "in very short order" and conceded she was facing defeat.

"If there is going to be a transfer of power in this province, and it certainly seems like there will be, it shouldn't be done behind closed doors. It should happen in public," she told reporters in Vancouver.

The project would increase Pacific exports of Canada's landlocked crude, a move that would help the country's large oil industry. It has met opposition from environmentalists and aboriginal groups in British Colombia who are worried about oil spills from the increase in tanker traffic it will cause.

Alberta Premier Rachel Notley, noting that the federal government has already approved the project, said no one province could unilaterally block the pipeline.

"Mark my words, that pipeline will be built. The decision has been made," she told reporters.

In an earlier statement, Notley said the province "will use the means at our disposal" to ensure the pipeline is built, without giving further details.

While there is some dispute over whether British Columbia has a formal veto right, it can raise multiple hurdles - like denying local construction permits - that could effectively make the pipeline impossible to build.

Canadian Prime Minister Justin Trudeau, whose government approved Trans Mountain last November, stood by the project.

"Regardless of a change in government in British Columbia or anywhere, the facts and evidence do not change," he told reporters in Italy during an official visit.

The Canadian constitution allows Trudeau in theory to declare the project to be for "the general advantage of Canada," which would let Ottawa to take control. That would be a nuclear option since it would trigger political outrage in provinces, which have wide-ranging powers.


Prolonged fights over Trans Mountain and other crude pipelines raise questions over other oil and gas projects in the Pacific province.

John Horgan, leader of the British Columbia New Democrats, has expressed reservations about a $27 billion liquefied natural gas terminal that Malaysia's Petronas [PETR.UL] wants to build in northern British Columbia. Petronas declined to comment.

Royal Dutch Shell plans to build an LNG export terminal in the province.

"At this point we're in a wait and see mode. We don't even actually know if the NDP and Greens can form a government," Shell Canada President Michael Crothers told Reuters on the sidelines of an industry event in Toronto.

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Walter E. Williams

Shares in Kinder Morgan Canada Ltd fell as much as 7.4 percent on their debut in heavy trading on Tuesday before recovering ground to close down 4.4 percent at C$16.24.

Kinder Morgan spun off the unit to help finance the expansion of its Trans Mountain.

It was the second most active stock in Toronto, with 6.5 million shares changing hands. The firm raised C$1.75 billion ($1.30 billion) in the initial public offering at C$17.00 per share last week.

Shares in parent company Kinder Morgan ended down 4.3 percent. The firm said on Tuesday that expansion remains on track to start service at the end of 2019.

The British Columbia Greens and NDP together only have 44 of the 87 seats in the provincial legislature. One of the people who brokered the deal said it would be hard for them to work together for four years as envisioned.

"I think it's very fragile. I think it's going to be a real test," Norman Spector told Vancouver's CKNW radio.

(Writing by David Ljunggren; Additional reporting by Leah Schnurr in Ottawa and Nicole Mordant in Vancouver; Editing by Andrew Hay and Lisa Shumaker)